SSR 87-10c: SECTIONS 218 AND 1104 OF THE SOCIAL SECURITY ACT (42
U.S.C. 418 AND 1304) STATE AND LOCAL EMPLOYMENT -- NONTERMINABILITY OF
COVERAGE AGREEMENTS -- CONSTITUTIONALITY

In 1951, California and the Secretary's predecessor entered into an
agreement under 42 U.S.C. § 418 that permitted extension of title II
Social Security coverage to employees of the State and certain of its
political subdivisions. The agreement stated that its provisions were "in
conformity with" § 418 and included a termination clause that exactly
mirrored the termination provision contained in the then existing version
of § 418(g). Under that version, States could terminate their § 418
Agreements in whole or part upon giving at least two years' advance notice
in writing. As amended by Congress in 1983, § 418(g) expressly prevents
States from withdrawing employees from the Social Security system even if
a termination notice had been filed before the amendment's enactment. When
the amendment to § 418(g) prevented the termination notices that
California had previously filed from taken effect, a civil action was
filed challenging the constitutionality of that amendment. In finding for
the plaintiffs, the district court decided that the § 418 Agreement
created a "contractual right" to withdraw from the Social Security system
and that such a right constituted "private property" within the meaning of
the Just Compensation Clause of the Fifth Amendment. The district court
concluded that, although amended § 418(g) effected a taking of property
without providing just compensation, a damages award would be contrary to
Congress' will and therefore simply declared the amendment
unconstitutional. On appeal, the Supreme Court noted that, because
Congress had anticipated that it would need to respond to changing
conditions, it had included in the law 42 U.S.C. § 1304, a clause
expressly reserving to Congress the right to alter, amend, or repeal any
provision of the Social Security Act. Accordingly, the Court found that
Congress had the power to amend § 418(g). The Court also found that the §
1304 reservation language had expressly notified California that Congress
had reserved the authority to amend not only § 418 but also agreements
entered into "in conformity with" that section. Finally, the Supreme Court
noted that the "contractual right" at issue in this case bore little, if
any, resemblance to rights held to constitute "property" within the
meaning of the Fifth Amendment. Since the termination provision in
California's § 418 Agreement exactly tracked the language of the statute
and conferred no right on the State beyond that contained in § 418 itself,
the Court concluded that the termination provision in that agreement did
not rise to the level of "property." In reversing the district court's
decision, the Supreme Court held that amended § 418 did not effect
a taking of property within the meaning of the Fifth Amendment.

POWELL, Supreme Court Justice:

On this appeal we review a decision of the District Court for the Eastern
District of California that § 103 of the Social Security Amendments Act of
1983, 97 Stat. 71, 42 U.S.C. § 418(g) (1982 ed., Supp. II), effected a
taking of property within the meaning of the Fifth Amendment by preventing
States from withdrawing state and local government employees from the
Social Security System.

I

A

The Social Security Act of 1935, 49 Stat. 620, as amended, 42 U.S.C. §
301 et seq., established an insurance program for "persons working
in industry and commerce as a long-run safeguard against the occurrence of
old-age dependency." H. R. Rep. No. 1300, 81st Cong., 1st Sess., p. 3
(1949). From that relatively humble beginning, the coverage of the Act has
been expanded to provide benefits not only to the "insured worker in his
old age," ibid., but also to "individuals and families when workers
retire, become disabled, or die." S. Rep. No. 98-13, Vol. 2, p. 78
(1983).[1] The "basic idea" of
Social Security "is that, while they are working, employees and their
employers pay earmarked social security contributions (FICA taxes) . . . .
Then, when earnings stop, or are reduced because of retirement in old-age,
death, or disability, cash benefits are paid to partially replace the
earnings that were lost." Ibid. The System operates on a "pay as
you go" basis, with current contributions "largely paid out in current
benefits," ibid. In the words of Congress, the System now functions
"as the Nation's basic social insurance program." H. R. Rep. No. 98-25, p.
19 (1983). To ensure that this important program could evolve as economic
and social conditions changed, Congress expressly reserved to itself
"[t]he right to alter, amend, or repeal any provision of" the Act. 42
U.S.C. § 1304.[2]

As of 1983, more than 90% of the Nation's paid employees, a total of more
than 115 million people, participated in the Social Security System. H. R.
Rep. No. 98-25, at 13.[3]
Participation in the System is, and has been since its inception,
"basically mandatory." Id., at 19. Therefore, most workers covered
by the System and their employers have no choice whether or not to
participate. In 1935, when the Act was adopted, Congress faced questions
as to whether it could compel the States and their political subdivisions
to include their employees in the
System.[4] Therefore, the Act at
that time excluded such employees from its coverage. See 42 U.S.C. §
410(a)(7). Responding to subsequent pressure from States that sought
Social Security coverage for their employees, in 1950 Congress enacted §
418, the provision at the heart of the controversy in this case.

Section 418 authorizes voluntary participation by States in the Social
Security System.[5] Under §
418(a), States may obtain coverage for their employees and employees of
their political subdivisions, enrolling all or only specified "coverage
groups" of workers. 42 U.S.C. § 418(a)(1) (1982 ed., Supp. II); see §
418(b)(5) (defining coverage
group).[6] States enter the
System by executing "an agreement" (§ 418 Agreement) with the Secretary of
Health and Human Services
(Secretary).[7] While § 418
gives States some authority over the content of the Agreements,
i.e., States may identify the covered employees, the provisions of
a § 418 Agreement are required to be "not inconsistent with the provisions
of" § 418. § 418(a)(1). From its enactment in 1950 through 1983, § 418
permitted states to terminate their § 418 Agreements "[u]pon giving at
least two years' advance notice in writing to the [Secretary]." §
418(g)(1). Once a State exercised its option to withdraw, it could not
thereafter reenter the System. § 418(g)(3).

Following adoption of § 418, all 50 States entered into § 418 Agreements
with respect to their own employees, local government employees, or
both.[8] "By the early 1960's
most States had made coverage agreements," H. R. Rep. No. 98-25, at 18,
and the percentage of state and local employees enrolled in the System
increased from 11% in 1951 to 70% in 1970, H. R. Comm. Print 97-34, at 25.
Since 1970, "[c]overage of State and local employees has remained fairly
constant at 70-72 percent." H. R. Rep. No. 98-25, at 18. As of 1983, "some
9.4 million out of the approximately 13.2 million State and local
employees" participated in the Social Security System. Id., at
17.

For the first 20 years of their participation, "very few" States
exercised their option under § 418(g) to withdraw from the System.
Id., at 18. Until the mid-1970's, the number of state and local
employees "leaving the system was always greatly exceeded by the number of
newly-covered employees -- in most years, by 50,000 or more."
Ibid.[9] Starting in
1976, however, this trend reversed, and the "numbers of positions being
terminated from coverage" began to exceed "the numbers of newly-covered
positions." Ibid. From 1977 through 1981, "termination activity was
greater than in the previous ten years," with coverage "terminated for
96,000 State and local government employees." Ibid. As of 1982,
coverage was "terminated for 595 State entities employing 190,000
workers." Ibid. Finally, "for the two-year period of 1983-84,
terminations [were] pending for 634 State and local entities employing
227,000 workers." Ibid.

After studying the trend towards termination of § 418 Agreements and the
reasons for it,[10] Congress
determined that the increasing rate of withdrawals was threatening the
integrity of the System in a number of important respects. As an initial
matter, Congress observed that the current rate of withdrawals would cost
the System between $500 million and $1 billion annually. H. R. Comm. Print
97-34, at 13-14. Congress further concluded that States' ability to
withdraw was "inequitable both for the employees who lose coverage and for
the vast majority of the nation's workforce who continue to pay into the
system." H. R. Rep. No. 98-25, at 18-19. While States terminating § 418
Agreements often did so in the course of designing benefits packages that
would attract long-term workers, Congress believed that sound social
policy also required protection of employees who move from job to job.
Id., at 19. Moreover, "the shifting of the tax burden of social
security from those workers who withdraw, but who remain entitled to
future benefits based on their past earnings," created resentment on the
part of workers whose participation in the System was
mandatory.[11]Ibid.

Accordingly, Congress decided to amend § 418(g) by repealing the
termination provision. As amended, § 418(g) provides that no § 418
Agreement "may be terminated, either in its entirety or with respect to
any coverage group, on or after April 20, 1983." The amendment expressly
prevents States from withdrawing employees from the System even if a
termination notice had been filed prior to enactment of the
amendment.[12]

B

On March 9, 1951, California and the Secretary entered into a § 418
Agreement, effective as of January 1, 1951, under which the parties agreed
to extend Social Security coverage to employees of the State and its
political subdivisions. The Agreement recited that its provisions were "in
conformity with" § 418, and authorized the State to modify the Agreement
to include additional groups of employees, "such modification to be
consistent with the provisions of" § 418. The Agreement also included a
clause that permitted the State to terminate the Agreement either in its
entirety or with respect to particular coverage groups. The terms of the
clause exactly mirrored the statutory termination provision embodied in §
418(g).[13]

When Congress amended § 418(g) in 1983, California had filed termination
notices on behalf of 71 of its political subdivisions, employing
approximately 34,000
persons.[14] When the
amendment prevented the termination notices from taking effect, appellees
commenced the lawsuits underlying this appeal, naming as defendants the
United States, and the Secretary and Undersecretary of the Department of
Health and Human Services. The first lawsuit was brought by several public
agencies of California, their employees and taxpayers, and by an
organization calling itself Public Agencies Opposed to Social Security
Entrapment. These parties alleged, among other claims, that amended §
418(g) had deprived them of their "contract rights" without just
compensation in violation of the Fifth
Amendment.[15] In the second
lawsuit, the State of California sought to enjoin enforcement of § 418(g)
as well as a declaration that the section was unconstitutional. The State
claimed that the federal defendants had acted in excess of their
constitutional authority and had violated the Tenth Amendment by breaching
their contract with the State and by impairing the State's "ability . . .
to structure its relationships with its
employees."[16] App. 26-27.

Ruling on cross-motions for summary judgment, the District Court held
that § 418(g) was unconstitutional. Public Agencies Opposed to Soc.
Sec. Entrapment v. Heckler, 613 F. Supp. 558 (ED Cal.
1985).[17] The court decided
that the § 418 Agreement created a "contractual right" to withdraw from
the Social Security System that ran in favor of both the State and its
public agencies. This contractual right existed independently of the
statutory termination provision, and Congress derived no authority from §
1304[18] to amend the § 418
Agreement, as opposed to § 418.

The contractual right to withdraw, reasoned the District Court,
constituted "private property" within the meaning of the Just Compensation
Clause of the Fifth Amendment. Amended § 418(g) effected a taking of that
property without providing the requisite just compensation. In the court's
view, the "only rational compensation would be reimbursement by the United
States to the State or public agencies, of the amount of money they
currently pay to the United States for their participation" in the Social
Security Program. 613 F. Supp., at 575. Since amended § 418(g) was enacted
to solve the Social Security "financial crisis," however, the District
Court concluded that an order awarding this measure of damages would be
"simply and clearly contrary to the will of Congress." Ibid.
Accordingly, the District Court simply declared § 418(g) unconstitutional.
Ibid. We noted probable jurisdiction, 474 U.S. (1985), and
now reverse.

II

A

Congress' decision that American workers need a federal program of social
insurance protecting them in old age and disability "has of necessary
called forth a highly complicated and interrelated statutory structure."
Flemming v. Nestor, 363 U.S. 603, 610 (1960). Since the Act was
designed to protect future, as well as present, generations of workers, it
was inevitable that amendment of its provisions would be necessary in
response to evolving social and economic conditions unforeseeable in 1935.
Ibid. Congress anticipated that it would be necessary to respond to
"ever-changing conditions" with "flexibility and boldness," ibid.,
and therefore included in the Act "a clause expressly reserving to it
'[t]he right to alter, amend, or repeal any provision' of the Act. § 1104,
49 Stat. 648, 42 U.S.C. § 1304. That provision makes express what is
implicit in the institutional needs of the program." Id., at 611.
As appellees must concede, the Act itself, including the original version
of § 418(g), created no contractual rights. Cf. Flemming v. Nestor,
supra, at 608-611; see also National Railroad Passenger Corp. v.
Atchison, T&S.F.R. Co., 470 U.S. _____, _____ (1985). Therefore,
there is no doubt that Congress had the power to amend the section.

In view of the purpose and structure of the Act, and of Congress' express
reservation of authority to alter its provisions, courts should be
extremely reluctant to construe § 418 Agreements in a manner that
forecloses Congress' exercise of that authority. While the Federal
Government, as sovereign, has the power to enter contracts that confer
vested rights, and the concomitant duty to honor those rights, see
Perry v. United States, 294 U.S. 330, 350-354 (1935); Lynch v.
United States, 292 U.S. 571 (1934), we have declined in the context of
commercial contracts to find that a "sovereign forever waives the right to
exercise one of its sovereign powers unless it expressly reserves the
right to exercise that power in" the contract. Merrion v. Jicarilla
Apache Tribe, 455 U.S. 130, 148 (1982). Rather, we have emphasized
that "[w]ithout regard to its source, sovereign power, even when
unexercised, is an enduring presence that governs all contracts subject to
the sovereign's jurisdiction, and will remain intact unless surrendered in
unmistakable terms." Ibid. Therefore, contractual arrangements,
including those to which a sovereign itself is party, "remain subject to
subsequent legislation" by the sovereign. Id., at 147.

These principles form the backdrop against which we must consider the
District Court's decision effectively to forbid Congress to amend a
provision of the Social Security Act. That decision heeded none of this
Court's often-repeated admonitions that contracts should be construed, if
possible, to avoid foreclosing exercise of sovereign authority. Those
admonitions take on added force when the arrangement pursuant to which the
Government is claimed to have surrendered a sovereign power is one that
serves to implement a comprehensive social welfare program affecting
millions of individuals throughout our Nation.

B

Venerable precedent supports our conclusion that Congress reserved the
authority to amend not only § 418 but also Agreements entered into "in
conformity with" that section. Just last term, we considered a statute in
which Congress had "expressly reserved its right to repeal, alter, or
amend the Act at any time," National Railroad Passenger Corp.,
supra, at _____, and we noted that the "effect of these few simple
words" has been settled since the Sinking-Fund Cases, 99 U.S. 700
(1879). Id., at _____. The Sinking-Fund Cases involved
federal statutes that governed railroads' obligations to the United States
on subsidy bonds. The statutes in question expressly reserved Congress'
authority to repeal, alter, or amend them, and Congress exercised that
power by requiring the railroads to set aside part of their current income
as a sinking fund to meet their debts to the Government as those debts
came due. The railroads claimed that this amendment deprived them of
property without due process and improperly interfered with their vested
rights. Id., at 719. In rejecting those arguments, the Court
explained that through the language of reservation, "Congress not only
retains, but has given special notice of its intention to retain, full and
complete power to make such alterations and amendments as come within the
just scope of legislative power." Id., at 720. The effect of the
Court's construction of the reservation was to authorize Congress not only
to amend the statute granting the railroads' corporate charter but also to
change the stipulations of a contract made under that charter subsequent
to and independently of the original statute. Whatever the limits of the
reserved power, it was "safe to say" that Congress had the authority to
provide by amendment whatever rules it might "have prescribed in the
original charter" and terms governing the "performance of contracts
already entered into." Id., at 721.

This reasoning disposes of appellees' contention that Congress lacked
authority to amend California's § 418 Agreement. The State accepted the
Agreement under an Act that contained the language of reservation. That
language expressly notified the State that Congress retained the power to
amend the law under which the Agreement was executed and by amending that
law to alter the Agreement
itself.[19] We have no doubt
that in 1950 Congress could have provided that States electing to enter
the Social Security System would not have authority to terminate their
participation. Therefore, amended § 418(g) falls well within the limits of
Congress' reserved power to alter the law governing performance of § 418
Agreements.

C

The § 418 Agreement provided that its terms were "in conformity with" §
418. Therefore, the Agreement expressly incorporated § 418, which of
course was fully subject to Congress' reserved power of amendment.
Appellees nonetheless insist that the termination provision embodied in
the Agreement constituted a valuable property right that was "taken" when
Congress enacted amended § 418(g). In the Sinking-Fund Cases, the
Court did observe that Congress' exercise of the reserved power "has a
limit" in that Congress could not rely on that power to "take away
property already acquired under the operation of the charter, or to
deprive the corporation of the fruits actually reduced to possession of
contracts lawfully made." 99 U.S., at 720. Similarly, other decisions have
held that Congress does not have the power to repudiate its own debts,
which constitute "property" to the lender, simply in order to save money.
Perry v. United States, 294 U.S. at 350-351; see Lynch v. United
States, 292 U.S., at 576-577.

But the "contractual right" at issue in this case bears little, if any,
resemblance to rights held to constitute "property" within the meaning of
the Fifth Amendment. The termination provision in the Agreement exactly
tracked the language of the statute, conferring no right on the State
beyond that contained in § 418 itself. The provision constituted neither a
debt of the United States, see Perry v. United States, supra, nor
an obligation of the United States to provide benefits under a contract
for which the obligee paid a monetary premium, see Lynch v. United
States, supra. The termination clause was not unique to this
Agreement; nor was it a term over which the State had any bargaining power
or for which the State provided independent consideration. Rather, the
provision simply was part of a regulatory program over which Congress
retained authority to amend in the exercise of its power to provide for
the general welfare. Under these circumstances, we conclude that the
termination provision in California's § 418 Agreement did not rise to the
level of "property." The provision simply cannot be viewed as conferring
any sort of "vested right" in the face of precedent concerning the effect
of Congress' reserved power on agreements entered into under a statute
containing the language of reservation. Since appellees had no property
right in the termination clause, amended § 418 did not effect a taking
within the meaning of the Fifth Amendment.

III

The judgment of the District Court is reversed, and the case is remanded
for further proceedings consistent with this decision.

It is so ordered.

[1] According to the Senate
Special Committee on Aging, the Social Security System is "much more" than
a "retirement program for older workers . . . . Social security is also
family security, protecting workers and their families from loss of
earnings because of death, retirement, or disability." Senate Special
Committee on Aging, Termination of Social Security Coverage: The Impact on
State and Local Government Employees, 94th Cong., 2d Sess., p. 9 (Comm.
Print 1976) (hereinafter Senate Report on Aging).

[2] Congress included this
provision in the original Act, and has retained it ever since. See
Flemming v. Nestor, 363 U.S. 603, 610-611 (1960).

[3] "The ten percent of workers
not . . . covered by social security [in 1983] include[d] most Federal
civilian workers (2.4 out of 2.7 million), about 30 percent of State and
local employees (approximately 3 million), and 10-15 percent of employees
of nonprofit organizations (up to 1 million)." H. R. Rep. No. 98-25, at
13.

[4] As Congress explained when
it was studying the reasons underlying States' decisions to withdraw
employees from the System, "[t]he Social Security Act of 1935 excluded
from coverage all employment for States and localities, primarily because
of the question of the constitutionality of any general levy of the
employer tax on States and localities." Subcommittee on Social Security of
House Committee on Ways and Means, Termination of Social Security Coverage
for Employees of State and Local Governments and Nonprofit Groups, 97th
Cong., 2d Sess., ser. no. WMCP:97-34, p. 20 (Comm. Print 1982)
(hereinafter H. R. Comm. Print 97-34).

[5] At the time Congress enacted
the amendment challenged in this case, it explained that provision for
voluntary participation by employees of State and local governments was
"the result of congressional desire to extend coverage as quickly and with
as little difficulty as possible to those employees who needed it most."
H. R. Rep. No. 98-25, at 19.

[6] Under the Act, therefore,
States decide which groups of employees will receive Social Security
coverage. Section 418(d)(3) creates an exception to this rule. Where state
employees already are members of a retirement program, that section
requires that a majority of such employees agree to participate in the
Social Security System. 42 U.S.C. § 418(d)(3) (1982 ed., Supp. II).

[7] For purposes of conciseness,
we use the term "Secretary" to refer to the federal official responsible
for administration of the System both under the current and prior versions
of the Social Security Act.

[8] As of 1983, the employees of
Alaska, "the only State to withdraw from the system, and of Maine,
Massachusetts, Nevada, and Ohio, which never chose to participate in the
system, "were not covered by Social Security. H. R. Rep. No. 98-25, at 17.
Each of those States, however, was party to a § 418 Agreement that
provided coverage to local government employees.

[9] During these years, "many
terminations were caused by consolidation of local jurisdictions, rather
than by withdrawal from the social security system." Id., at 18.

[10] The Senate Special
Committee on Aging found that States offered the following reasons for
terminating their § 418 Agreements: employees wanted more take-home pay
through a reduction in payroll deductions; state and local governments
sought to cut costs by dropping Social Security coverage; news reports
concerning "the projected exhaustion of social security trust funds in the
1980's" led employees to believe that benefits would cease; state and
local governments believed that Social Security taxes would continue to
rise, and thus viewed termination as a means "to achieve more static and
budgetable expenditures;" some employees favored termination because they
perceived that they would receive Social Security benefits even if they
were no longer required to pay into the System; and alternative retirement
plans were believed to pay higher levels of benefits. Senate Report on
Aging, pp.6-8; see also H. R. Comm. Print 97-34, at 6-7. The Committee
also found that "many" decisions to withdraw from the System were made in
the absence of "[i]nformation necessary for informed judgments." Senate
Report on Aging, at 8.

[11] Congress regarded
voluntary participation by some employees, such as those of state and
local governments, as an anomaly in an otherwise mandatory program. "The
fundamental principle underlying compulsory coverage for most workers is
that responsibility for paying for insurance against such risks should be
borne by the society as a whole to the extent possible." H. R. Comm. Print
97-34, at 4. Mandatory participation is necessary to sustain the
"'pay-as-you-go' financing structure," particularly since workers retain
coverage "regardless of how many times they change their jobs in a
lifetime." Ibid. Mandatory participation ensures workers that they
will obtain a minimum level of benefits in the event of a catastrophe that
the worker did not foresee or plan for. Ibid. In the context of a
mandatory system, voluntary participation for some employees was, in
Congress' view, "inconsistent with the principle of equal treatment of all
citizens." Id., at 5.

"(g) No agreement under this section may be terminated, either in its
entirety or with respect to any coverage group, on or after the date of
the enactment of the Social Security Amendments of 1983.'

"(b) The amendment made by subsection (a) shall apply to any agreement in
effect under [§ 418] on the date of the enactment of this Act, without
regard to whether a notice of termination is in effect on such date, and
to any agreement or modification thereof which may become effective under
such [§ 418] after that date."

"The State, upon giving at least two years' advance notice in writing to
the [Secretary], may terminate this agreement, either in its entirety or
with respect to any coverage group, effective at the end of a calendar
quarter specified in the notice, provided, however, that the agreement may
be terminated in its entirety only if it has been in effect not less than
five years prior to receipt of such notice, and provided further that the
agreement may be terminated with respect to any coverage group only if it
has been in effect with respect to such coverage group for not less than
five years prior to receipt of such notice." Reprinted, App. 31.

[14] If these employees were
withdrawn from the System, "approximately $33.7 millio[n] would be lost to
the social security trust funds in 1984." Id., at 61.

[15] Plaintiffs in this
lawsuit also alleged that the enactment denied them their contract rights
without due process, that it constituted an attempt to regulate
"'essential state and local government functions,' in violation of the
Tenth Amendment," and that they were entitled to specific performance for
the Government's breach of contract. 613 F. Supp., at 565.

[16] Though the State did not
press any claim that amended § 418(g) effected a taking of its property
without the compensation required by the Fifth Amendment, the District
Court rested its decision on that ground, finding it unnecessary to reach
any of the arguments raised by the State. Therefore, none of those
arguments is before us.

[17] Before reaching the
merits, the District Court determined that the plaintiffs in both suits,
appellees here, had standing to challenge the validity of the enactment.
With respect to the first lawsuit, brought by the public agencies and
certain individuals, the court concluded that the agencies alleged an
injury sufficient to confer standing because they claimed that amended §
418(g) deprived them of their contractual rights as third party
beneficiaries of the State's § 418 Agreement. Id., at 567-570. The
individual plaintiffs had standing because they claimed that the federal
defendants had denied them equal protection. Id., at 571. With
respect to the second suit, the court found that the State had standing
because it alleged "a judicially cognizable interest in the preservation
of its own sovereignty, and a diminishment of that sovereignty by the
alleged interference in its employment relations with its public
employees." Id., at 567. While appellants suggest in this Court
that none of the plaintiffs in the lawsuit brought by the public agencies
was properly before the District Court, they concede, and we agree, that
there is no question concerning the State's standing to bring the action.
Therefore, the District Court plainly had authority to resolve this
controversy, as do we.

[18] Title 42 U.S.C. § 1304
provides: "The right to alter, amend, or repeal any provision of this
chapter is hereby reserved to the Congress."

[19] The language of § 418 and
of California's § 418 Agreement provides further support for this
conclusion. Section 418(a)(1) requires that the provisions of § 418
Agreements be "not inconsistent with the provisions of this section," 42
U.S.C. § 418(a)(1), and the Agreement provided that it was "in conformity
with" § 418. The State was thus on notice that the terms of its Agreement
must mirror the provisions of the section, which could be amended under
the reserved power. If Congress amended § 418 in such a manner as to
render a provision of an Agreement "inconsistent" or no longer "in
conformity" with the section, then the logical conclusion is that the
inconsistent provision no longer was to be given legal effect.

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